Gold Digitech Theatres Pvt. Ltd. v. Religare Finvest Ltd. & Ors.

Gold Digitech Theatres Pvt. Ltd.

…Appellant

…Respondent

Case No: Misc. Appeal No. 100/2023

Date of Judgement: 07/08/2023

Judges:

Mr Justice Ashok Menon, Chairperson

For Appellant: Mr Gaurang Kinkhabwala i/b Mr Puneet Gogad, Advocate.

For Respondent: Mr Charles D’souza along with Mr Archit Virmani and Mr Atul Gupta, i/b Optimus Legal, Mr Sidharth Samantaray, Advocate.

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Facts:

This case involves two Miscellaneous Appeals (Misc. Appeal No. 100/2023 and Misc. Appeal No. 101/2023) filed before the Debts Recovery Appellate Tribunal, Mumbai. The Appellants in both appeals claim to be tenants in occupation of the secured premises and face the threat of being dispossessed from the property in the execution of an order obtained against the borrower/landlord (third Respondent) by Religare Finvest Ltd. (first Respondent Financial Institution) for the realization of the debt allegedly due. The borrower (third Respondent) and the Appellants had filed separate Securitisation Applications (S.A. Nos. 218 of 2023, 255 of 2023, and 256 of 2023) before the Debts Recovery Tribunal (D.R.T.). The borrower (third Respondent) had made a proposal to settle the debt through a One-Time Settlement (OTS). In S.A. No. 218 of 2023 filed by the borrower, the D.R.T., vide order dated 11.07.2023, concluded that sufficient time had already been granted, and although the borrower had paid ₹1 crore towards the loan, the balance of nearly ₹12 crores was yet to be paid. Therefore, further time could not be granted, and the Financial Institution was permitted to proceed with the SARFAESI measures based on the order obtained under Section 14 from the Chief Judicial Magistrate, Thane, to take physical possession of the secured assets. In S.A. Nos. 255 of 2023 and 256 of 2023 filed by the Appellants, no orders were passed on the merits of the claim of tenancy put up by the Appellants. However, these S.A.s were adjourned to 12.02.2024 in view of the order passed in S.A. No. 218 of 2023 (filed by the borrower). No interlocutory or interim orders were passed in these two S.A.s. The possession of the property was scheduled for the day of the hearing before the Debts Recovery Appellate Tribunal, and the Appellants were apprehending that they might be dispossessed from the property.

Arguments by the Parties:

Arguments by the Appellant in Misc. Appeal No. 101/2023 (Fiitjee Ltd.):

The Appellant produced a lease deed purportedly executed on 21.05.2008 and an addendum cum rectification deed executed on 18.09.2017, whereby the term of the lease was extended up to 2032 with an enhancement of rent every three years. The addendum cum rectification deed corrected a mistake in the original lease deed regarding the description of the floor leased to Fiitjee Ltd. The original lease deed mentioned the second floor, whereas it was actually the first floor that was leased out, and this mistake was rectified. The Appellant pointed out the sanction letter pertaining to the three loan facilities granted to the borrower, the notice issued under Section 13(2), the possession notice under Section 13(4), and the application filed under Section 14 before the Chief Judicial Magistrate. In all these documents, it was mentioned that the Appellant was in possession of the first floor of the mortgaged premises. The order of the Chief Judicial Magistrate under Section 14 also contained the description of the property in the schedule, which clearly stated that the three floors of the building were in occupation of the Appellants.

Arguments by the Appellant in Misc. Appeal No. 100/2023 (Gold Digitech Theatres Pvt. Ltd.):

Although there was no registered lease deed executed between the borrower and Gold Digitech Theatres Pvt. Ltd., it was stated that there was an agreement executed between them.

Arguments by the Respondent Financial Institution:

The Respondent vehemently opposed the right of Gold Digitech Theatres Pvt. Ltd. to continue in occupation of the premises under a document that was not legally valid.

The Respondent pointed out that the addendum cum rectification document registered between the borrower and Fiitjee Ltd. was intended to correct an alleged mistake that had purportedly crept into the first lease deed without any bona fides and was intended only to defeat the interest of the mortgagee.

Arguments by the Borrower (third Respondent):

It was undertaken that whatever the amount, the borrower was willing to settle it by the end of the year.

Cases Cited:

None

Sections and Laws Referred:

Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act)

Section 13(4) of the SARFAESI Act

Section 14 of the SARFAESI Act